Hashing error is slightly better when the background color is preserved during rotation, but still consistently drops to 75-80% bit match. They probably hash rotated images to avoid this shortcoming however.
Considering two unrelated cat pictures can match with 68% bit similarity, Apple will likely have to deal with many false positives regardless. 1 in 1 Trillion error seems like utterly wrong based on their approach: neural networks are not intelligent enough to accomplish that kind of accuracy, and current NN approaches have a known sensitivity to rotation and arbitrary perspective transformations (which was one of the original sparks for the creation of alternatives like capsule nets).